Cisco Systems Inc., the largest maker of computer networking equipment, gave a lukewarm revenue forecast for the coming fiscal year, adding to concern that spending on tech infrastructure is slowing.
Sales will be $57 billion to $58.2 billion in fiscal 2024, the company said Wednesday in a statement. That’s just shy of the $58.3 billion analysts had estimated on average, according to a Bloomberg survey.
The outlook signals that Cisco’s growth will decelerate sharply from the 11% jump it experienced in the just-ended fiscal year. The company had seen orders stack up during a prolonged period of component shortages. With those parts now available, the company has been able to ship hardware — and sell associated software — to meet pent-up demand. But that surge is fading.
Cisco shares fell about 2% in extended trading following the announcement. The stock closed at $52.96 on Wednesday, leaving it up 11% this year.
In the period ending in October, sales will rise to about $14.6 billion, That’s in line with analysts’ estimates of $14.57 billion. Excluding certain items, profit will be roughly $1.03 a share, compared with an average estimate of 99 cents.
Cisco’s gross margin has been a bright spot. It’s expected to be 65% to 66% this quarter on an adjusted basis, the company said. Analysts estimated 64.7%.
Chief Executive Officer Chuck Robbins has been working for years to remake his company as a provider of networking services and software. His management team points to the amount of recurring revenue that it’s building up as an indication that the transition is succeeding.
But Cisco still mostly relies on selling expensive pieces of network equipment — with proprietary software — and that makes it hard to avoid the swings in demand from corporate customers.
In Cisco’s fiscal fourth quarter, which ended July 29, revenue rose 16% to $15.2 billion. Profit, minus some items, was $1.14 a share. That compares with estimates of about $15.1 billion in revenue and $1.06 a share in earnings.
(Updates with chart after third paragraph and gross margin in sixth paragraph.)